Boeing deal’s effects up in air
Agreement splits Machinists union, excites state
While Boeing executives chose to remain silent the day after the Machinists’ contract vote secured the work of building the 777X jet for Washington, top officials at the Machinists’ national headquarters and in Gov. Jay Inslee’s office were almost giddy Saturday.
“It’s going to be sunny in Seattle for another 40 or 50 years,” gushed Rich Michalski, who represented the International Association of Machinists national headquarters in the 777X negotiations. “Boeing is going to be here forever now.”
And Alex Pietsch, director of Inslee’s aerospace office, savored his “excitement for the future.”
“It’s a really big deal,” Pietsch said.
Yet for some observers, the heady enthusiasm after Friday’s narrow 51 percent vote was diluted by the sobering prospect of dwindling middle-class wages and benefits, and the near certainty that pressure for future concessions to Boeing will continue.
Leon Grunberg, co-author of “Turbulence,” a book that surveyed the attitudes of Boeing union members toward the company, said the 777X contract deal is unusual even in an era of weakening organized labor.
He said unions in North America have repeatedly been forced to make major concessions on wages and benefits, though usually when a company is in crisis and facing bankruptcy or closure.
In this case, the Machinists were pressed to give up their pensions though Boeing is soaring financially.
“It’s unusual for a company that’s doing so well to push so hard,” Grunberg said. “If a local as strong as the Machinists with a company as successful as Boeing has to agree to give up these things they’ve won, the trend (of a diminished labor movement) will definitely continue.”
Local aerospace analyst Scott Hamilton, of Leeham.net, said though the 777X deal puts this state in a better position to win the work of building future Boeing airplanes, it’s “hyperbole” to talk about guaranteeing future work.
When the jet-maker launches its next new airplanes, likely a 757 replacement around 2019 or a 737 replacement around 2020, “Boeing will take us through this all over again,” he said.
“Boeing will come back to the unions and say, ‘Give us more concessions,’ ” Hamilton said. “It will come back to the state and say, ‘Give us more tax breaks.’ ”
“There is no guarantee that the next new airplane will be built here.”
For Pietsch of the governor’s aerospace office, however, it’s one step at a time: the first being to smooth the way for Boeing to construct a new facility to fabricate the 777X’s composite plastic wing.
Boeing projects that just this facility, at a still-unidentified site in Washington, will require up to $4 billion in new investment and will provide nearly 3,000 jobs at peak production in 2024.
“We’ve been working all year with this goal in mind. We know the 777X will bring tremendous economic activity for the state of Washington,” Pietsch said. “Now we go about the work of making sure Boeing has what it needs to build this wing factory and get started.
“Then we can start talking to the rest of the supply chain and bringing more companies to Washington,” he added.
The IAM International’s Michalski, who was in Seattle for the Friday vote, emphasized the “silver lining” of job security.
“If you’re a young person, you’ve got a future here in aerospace,” Michalski said. “Parents and grandparents should be happy.
“It’s all about being able to compete with the rest of the world,” he added, expressing a common sentiment with Boeing executives.
Yet the deal leaves the IAM in disarray and greatly diminishes the bargaining power of blue-collar workers.
Grunberg, a University of Puget Sound professor of sociology, sees the context of the Boeing deal as the shrinking of the labor movement nationally.
Union membership has shrunk to 5 or 6 percent of the workforce in the private sector and the number of strikes is “down dramatically” since the 1980s, he said.
The steady erosion of traditional pensions in the American workplace is well-documented.
Between 1979 and 2011, the share of private-sector workers whose retirement was funded only by pensions dropped from 28 to 3 percent, according to the Employee Benefit Research Institute.
Over the same period, the share of workers with only 401(k) plans rose from 7 to 31 percent. Fifty-five percent of workers have no retirement benefits.
Against Boeing’s threat to move work elsewhere, the union could do little but “slow the tide” of concessions, Grunberg said. It is left split and weakened as never before.
Boeing developed maximum leverage by negotiating outside the normal schedule of contract talks, when it could threaten to locate a new airplane elsewhere and the union couldn’t strike.
Grunberg said the internal union tension that developed during the negotiations over the past two months “has exposed and created divisions between the IAM local and the International and within the local membership.”
He said the white-collar union at Boeing, the Society of Professional Engineering Employees in Aerospace, will clearly be next in line to have its 21,000 local members’ pensions frozen when that union’s contract expires in 2016.
“Weakening Boeing’s strongest union will make SPEEA’s position much weaker,” Grunberg said.
Hamilton, the Seattle-area aerospace analyst, agreed.
“SPEEA will be in the fat bull’s-eye next time,” he said.
For the IAM, without even a contract to negotiate for a decade to come, the future is uncertain.
Both Grunberg and Hamilton said enticements in the contract offer – including a chance at early retirement at age 58 without any pension penalty from 2016, plus large company contributions to a new retirement-savings plan in 2017 and 2018 – could induce many IAM veterans to retire in those years.
That would skew the IAM demographic toward younger workers less active in the union.
“It will be a very different workplace,” Grunberg said.
The bitter acrimony within the union was clear Saturday on the Facebook page for Rosie’s Machinists 751, a rallying point for Vote No union activists.
“ANYONE who voted yes is a traitor, a coward, and a scab. They should be blackballed,” one angry Machinist posted.
Trying to calm such sentiment, Wilson Ferguson, president of the Local A unit of the district and a prominent leader of the Vote No campaign, posted a message calling for respect.
“Those people are not scabs. They are not sheep,” Ferguson said in an interview. “The members have spoken. We have to move forward and heal the damage.”
Michalski, representing the union’s International headquarters, insisted in an interview that “the union’s future is bright.”
“We’re a family. Families have differences,” he said. “There’s nothing wrong with people having different opinions. We have to grow together again.”
Michalski said the 777X deal was tough, but he urged people to accept the “silver lining” of future jobs.
Boeing “made demands. We tried to change that. We couldn’t,” Michalski said.
“It’s not a place we wanted to be,” Michalski added, referring to the freezing of the pensions. “At the same time, we maximized our job security.”